June 22, 2009

Razing The Amazon--not So Lucrative After All

Deforestation in the Brazilian Amazon is an ongoing ecological disaster, causing massive biodiversity loss and major carbon-dioxide
emissions. But unfortunately, there are also strong economic incentives for
rural Brazilians to hack down rain forest. Not only can they make money selling the timber, but they can then raise cattle and plant crops on the cleared land. But here's a question: Has all this deforestation produced any sort of sustained
economic growth in Brazil’s hinterlands? A recent paper in Science, based on a study of 286 Brazilian
municipalities with varying histories of deforestation, has concluded that it has
not. Areas that cut down their rainforest do see a short-term boost in
per-capita income, life expectancy, and literacy rates. But once the trees
are gone, those gains disappear, leaving deforested municipalities just as
poor as those that preserved their forests.

It’s a stunning find. After all, shouldn’t cleared rainforest land that’s been converted to farming or
ranching continue to produce income more or less indefinitely? As it turns out, no. Soil in the Amazon region is fairly poor and starts to decline in productivity after a
few years of farming. This depletion of the soil is a major reason why per-capita income generally ends up dropping to pre-deforestation
levels.

So if deforestation in the Amazon is a lose-lose proposition in all but
the most shortsighted of timeframes, what can be done to stop it? There’s no shortage of proposals for forestry-based carbon offsets and other systems of paying people to leave the forest intact. But in order
for these payment systems to work, it’s necessary to
determine who actually owns which parts of the forest in the first place. In Brazil, that's easier
said than done. A recent Economist article cited a study finding that only 14 percent of private land in
the Amazon is backed by a secured title. The rest of the privately controlled
land in the region is either “owned” on the basis of fake documents or simply occupied by
squatters.

The Brazilian legislature recently passed a land-reform
law that would attempt to bring some order to this free-for-all by granting
formal titles to most of the current occupants of land in the Amazon, while
returning the largest squatter-occupied parcels—those in excess of 1,500
hectares—to the government. Brazil’s president, Luiz Inacio Lula da Silva, is
likely to sign the bill, though he plans on vetoing provisions that would allow corporations and
foreigners to receive titles to Amazonian land. Environmental groups are divided on whether land reform is a good idea. On the one
hand, it’s difficult to regulate land use—or incentivize conservation—in the
absence of clear land ownership. On the other hand, giving titles to squatters
could encourage others to start squatting on remaining government land even
deeper into the Amazon.

The key to making land reform work will be
figuring out how to keep these future squatters at bay. It won’t be easy: As
this New York Times article relates, the Brazilian environmental protection agency
is almost comically understaffed for cracking down on illegal logging and
settlement in an area as large as the Amazon. But until Brazil can get control
of its forest frontier, the environmental devastation will continue, leaving
nothing but the same old poverty in its wake.